Offices Space Market Report Austin | Q4 2020
Office space market report |Q4 2020
Austin office space is feeling the effects of COVID-19. Interestingly enough, lease rates are not correcting as expected. During the last quarter of 2020, Austin vacancies rose 2%. Current vacancy is now close to 17%.
Sublease market for office space
Subleases are increasing into 2021. This has been caused by COVID-19 effects pushing businesses out of business and further consolidations due to working at home. Full Service lease rates are remaining flat. Pre-leasing is moving down significantly above 30% for the Austin office space market. You can cross compare with previous market news updates on our website.
Normalization predictions?
We predict some normalization potential into the summer of 2021. This is all predicated on Geo-political movements and the COVID vaccine distribution.
Vacancy overview for the market
You can view office lease rates with our tracking chart for sub-markets. As stated earlier, average vacancy is near 17%. The NE and South sub-market has the highest vacancy rates at 40% and 32% for Class A office space. As a tenant , we would guide you towards those sub-markets for the best lease rates.
Shire Commercial has helped clients find suitable office solutions since 2004. We also provide recommendations for space planners, although most of the time the landlord’s team has planners they like to use. For your next Law office, contact Shire Commercial!
Tesla Plant Austin
Tesla Plant in Austin
Tesla announced they made the decision to open their Cyber truck factory near ABIA (Austin Bergstrom International Airport). The decision was made on July 27th during their earnings call. Here is an overview of the deal and the tax incentives provided to Tesla.
Construction of Tesla Plant
Forecasts for construction starts are for the third quarter of 2020. Start up forecasts are currently for the end of 2021. With that being said, many factors play into construction so we would predict the real opening may have a few months added onto the open date. Tesla’s venture started early in 2020 for its gigafactory. The site is 2100 acres in Southeastern Austin. There is criticism around no oversight on this development from an independent authority. “Judge and county commissioners are allowing Tesla to write its own ticket and exempt themselves from county policy” according to Jeremy Hendricks (regional director for Laborers).
Tax Breaks
Overall the tax break for Tesla in Austin is $13.9 Million dollars. The tax rebates are incremental and they are as follows:
- 70% Tax rebate for the first 1.1 Billion in investments
- 75% Tax rebate for the second Billion in investments
- 80% Tax rebate for the third Billion in investments
Tax revenue for Travis County will see approx $8.8M for the first 10 years of Tesla’s existence in the Austin area. Tesla promises to pledge 10% of its pre-incentive tax revenues to local nonprofits, education and transportation causes. The deal is performance based, Tesla could lose on its tax breaks if it does not hold up their part of the deal. The company is also required to hire at least 50% of its workforce from residents in Travis county. Minimum wage is the base line requirement at $15 per hour.
Summary
- 5,000 new jobs
- SF 4-5 Million
- $8.8 Million in tax revenue over 10 years
- $776,000 in school revenues
- $13.9 Million in Tax breaks over 10 years
Google Fiber Austin Summary
Google Fiber Austin Summary
Google fiber announced a roll out into the Austin area recently. In article published by the Austin business journal, Google Fiber has met up with some resistance regarding the use of utility poles owned by their competitor ATT. Google and ATT decided to work a deal outside the City Council of Austin. Currently ATT owns 20% of the utiltiy poles and there is a proposition in place called item 66 that would change the rules on allowing a broader range of telecom providers to use utility poles in the City of Austin’s right of way.
Labor unions have written the mayor and city council to delay or oppose a change to the city’ rules with regards to utility pole usage. The labor unions appear to have been written at the request of ATT. So this dispute is slowing implementation down on Google fiber for Austin.